State and Local Government Series Securities Overview

The State and Local Government Series (SLGS) securities program was established in 1972 as the result of federal legislation enacted in 1969 which restricted state and local governments from earning arbitrage profits by investing bond proceeds in higher yielding investments. In 1992, SLGS were centralized within the Special Investments Branch (SIB) of the Office of Public Debt Accounting in Parkersburg, WV.

SLGS securities are offered for sale to issuers of state and local government tax-exempt debt to assist with compliance of yield restriction or arbitrage rebate provisions of the Internal Revenue Code.

Subscribers may invest in time deposit or demand deposit types of securities.

All SLGS securities are issued in book-entry form and are non-marketable.

Time Deposit SLGS

The securities are issued as Certificates of Indebtedness, Notes, or Bonds.

Maturity length can be 15 days up to 40 years.

The interest rate earned on time deposit securities is one basis point below the current estimated Treasury borrowing rate for a security of comparable maturity. See Daily Rate Table.

Demand Deposit SLGS

The SLGS demand deposit security is a one-day certificate of indebtedness.

The principal and daily accrued interest are automatically rolled over each day until redemption is requested.

Purchasing SLGS

Funds for purchasing the security are sent through the Fedwire Funds Transfer system (Fedwire) on the issue date. Scheduled interest and redemption payments are paid through Automated Clearing House (ACH). Fedwire pays some of the proceeds of redemptions requested before maturity.